In 1613, the town of Kuwait was founded in modern-day Kuwait City. In 1716, the Bani Utub settled in Kuwait, which at this time was inhabited by a few fishermen and primarily functioned as a fishing village. In the eighteenth century, Kuwait prospered and rapidly became the principal commercial center for the transit of goods between India, Muscat, Baghdad and Arabia. By the mid 1700s, Kuwait had already established itself as the major trading route from the Persian Gulf to Aleppo.
During the Persian siege of Basra in 1775–79, Iraqi merchants took refuge in Kuwait and were partly instrumental in the expansion of Kuwait's boat-building and trading activities. As a result, Kuwait's maritime commerce boomed, as the Indian trade routes with Baghdad, Aleppo, Smyrna and Constantinople were diverted to Kuwait during this time. The East India Company was diverted to Kuwait in 1792. The East India Company secured the sea routes between Kuwait, India and the east coasts of Africa. After the Persians withdrew from Basra in 1779, Kuwait continued to attract trade away from Basra.
Kuwait was the center of boat building in the Persian Gulf region. During the late eighteenth and nineteenth centuries, vessels made in Kuwait carried the bulk of trade between the ports of India, East Africa and the Red Sea. Kuwaiti ships were renowned throughout the Indian Ocean. Regional geopolitical turbulence helped foster economic prosperity in Kuwait in the second half of the 18th century. Perhaps the biggest catalyst for much of Kuwait becoming prosperous was due to Basra's instability in the late 18th century. In the late 18th century, Kuwait partly functioned as a haven for Basra's merchants, who were fleeing Ottoman government persecution. Kuwaitis developed a reputation as the best sailors in the Persian Gulf.
The Sheikhdom of Kuwait became a British protectorate in 1899 (until 1961) after the Anglo-Kuwaiti Agreement of 1899 was signed between Sheikh Mubarak Al Sabah and the British government in India due to severe threats to Kuwait's independence from the Ottoman Empire.
Following the Kuwait–Najd War of 1919–20, Ibn Saud imposed a trade blockade against Kuwait from the years 1923 until 1937. The goal of the Saudi economic and military attacks on Kuwait was to annex as much of Kuwait's territory as possible. At the Uqair conference in 1922, the boundaries of Kuwait and Najd were set; as a result of British interference, Kuwait had no representative at the Uqair conference. Ibn Saud persuaded Sir Percy Cox to give him two-thirds of Kuwait's territory. More than half of Kuwait was lost due to Uqair. After the Uqair conference, Kuwait was still subjected to a Saudi economic blockade and intermittent Saudi raiding.
The Great Depression harmed Kuwait's economy, starting in the late 1920s. International trading was one of Kuwait's main sources of income before oil. Kuwaiti merchants were mostly intermediary merchants. As a result of the decline of European demand for goods from India and Africa, Kuwait's economy suffered. The decline in international trade resulted in an increase in gold smuggling by Kuwaiti ships to India. Some Kuwaiti merchant families became rich from this smuggling. Kuwait's pearl industry also collapsed as a result of the worldwide economic depression. At its height, Kuwait's pearl industry had led the world's luxury market, regularly sending out between 750 and 800 ships to meet the European elite's desire for pearls. During the economic depression, luxuries like pearls were in little demand. The Japanese invention of cultured pearls also contributed to the collapse of Kuwait's pearl industry.
Golden Era (1946–82)
From 1946 to 1982, Kuwait experienced a period of prosperity driven by oil and its liberal atmosphere. In popular discourse, the years between 1946 and 1982 are referred to as the "Golden Era". In 1950, a major public-work programme began to enable Kuwaitis to enjoy a modern standard of living. By 1952, the country became the largest oil exporter in the Persian Gulf region. This massive growth attracted many foreign workers, especially from Palestine, India, and Egypt – with the latter being particularly political within the context of the Arab Cold War. In June 1961, Kuwait became independent with the end of the British protectorate and the sheikh Abdullah Al-Salim Al-Sabah became an Emir. Kuwait's national day, however, is celebrated on 25 February, the anniversary of the coronation of Sheikh Abdullah (it was originally celebrated on 19 June, the date of independence, but concerns over the summer heat caused the government to move it). Under the terms of the newly drafted constitution, Kuwait held its first parliamentary elections in 1963. Kuwait was the first of the Arab states of the Persian Gulf to establish a constitution and parliament.
In the 1960s and 1970s, Kuwait was the most developed country in the region. Kuwait was the pioneer in the Middle East in diversifying its earnings away from oil exports. The Kuwait Investment Authority is the world's first sovereign wealth fund. From the 1970s onward, Kuwait scored highest of all Arab countries on the Human Development Index. Kuwait University was established in 1966. Kuwait's theatre industry was well-known throughout the Arab world.
In the 1960s and 1970s, Kuwait's press was described as one of the freest in the world. Kuwait was the pioneer in the literary renaissance in the Arab region. In 1958, Al Arabi magazine was first published, the magazine went on to become the most popular magazine in the Arab world. Many Arab writers moved to Kuwait because they enjoyed greater freedom of expression than elsewhere in the Arab world. The Iraqi poet Ahmed Matar left Iraq in the 1970s to take refuge in the more liberal environment of Kuwait.
Kuwaiti society embraced liberal and Western attitudes throughout the 1960s and 1970s. For example, most Kuwaiti women did not wear the hijab in the 1960s and 70s.
1982 to present day
In the early 1980s, Kuwait experienced a major economic crisis after the Souk Al-Manakh stock market crash and decrease in oil price.
During the Iran–Iraq War, Kuwait supported Iraq. Throughout the 1980s, there were several terror attacks in Kuwait, including the 1983 Kuwait bombings, hijacking of several Kuwait Airways planes and the attempted assassination of Emir Jaber in 1985. Kuwait was a regional hub of science and technology in the 1960s and 1970s up until the early 1980s; the scientific research sector significantly suffered due to the terror attacks.
After the Iran–Iraq War ended, Kuwait declined an Iraqi request to forgive its US$65 billion debt. An economic rivalry between the two countries ensued after Kuwait increased its oil production by 40 percent. Tensions between the two countries increased further in July 1990, after Iraq complained to OPEC claiming that Kuwait was stealing its oil from a field near the border by slant drilling of the Rumaila field.
In August 1990, Iraqi forces invaded and annexed Kuwait. After a series of failed diplomatic negotiations, the United States led a coalition to remove the Iraqi forces from Kuwait, in what became known as the Gulf War. On 26 February 1991, the coalition succeeded in driving out the Iraqi forces. As they retreated, Iraqi forces carried out a scorched earth policy by setting oil wells on fire. During the Iraqi occupation, more than 1,000 Kuwaiti civilians were killed. In addition, more than 600 Kuwaitis went missing during Iraq's occupation, approximately 375 remains were found in mass graves in Iraq.
In March 2003, Kuwait became the springboard for the US-led invasion of Iraq. Upon the death of the Emir Jaber, in January 2006, Saad Al-Sabah succeeded him but was removed nine days later by the Kuwaiti parliament due to his ailing health. Sabah Al-Sabah was sworn in as Emir.
From 2001 to 2009, Kuwait had the highest Human Development Index ranking in the Arab world. In 2005, women won the right to vote and run in elections. In 2014 and 2015, Kuwait was ranked first among Arab countries in the Global Gender Gap Report. Sabah Al Ahmad Sea City was inaugurated in mid 2015.
The Amiri Diwan is currently developing the new Kuwait National Cultural District (KNCD), which comprises Sheikh Abdullah Al Salem Cultural Centre, Sheikh Jaber Al Ahmad Cultural Centre, Al Shaheed Park, and Al Salam Palace. With a capital cost of more than US$1 billion, the project is one of the largest cultural investments in the world. In November 2016, the Sheikh Jaber Al Ahmad Cultural Centre opened. It is the largest cultural centre in the Middle East. The Kuwait National Cultural District is a member of the Global Cultural Districts Network.